June 6th 2008

The Houston Chronicle

June 6, 2008

A timber company controlled by Gap founder Donald Fisher won preliminary court approval to take control of bankrupt Houston-based Maxxam units including Scotia Pacific and Pacific Lumber.

U.S. Bankruptcy Judge Richard Schmidt today said he intends to approve a reorganization plan for all six Maxxam units that was sponsored by Marathon Structured Finance Fund and Mendocino Redwood Co., which is controlled by the Fisher family. To gain final approval, Mendocino and Marathon must make three changes to the plan, Schmidt said.

The plan "is confirmable, subject to three technical corrections, if they are willing to accept them," Schmidt said in court in Corpus Christi. The changes relate to dividing up any money won in lawsuits involving the bankrupt units.

Marathon and Mendocino would take control of 210,000 acres of timberland, along with mills and the company-owned town of Scotia, Calif., in a deal valued at about $580 million. The Maxxam units filed for protection from creditors in January 2007. Until last month, Maxxam had fought to reorganize the units and keep its ownership stakes.

Schmidt rejected a rival plan to give noteholders owed more than $800 million control of the timberland in northern California.

The timber interests were at the heart of a years-long battle between Maxxam and environmentalists, who battled to protect old-growth California forests from harvest.